This is the third article in a series.
January 14, 2015—There was a point last spring when the comprehensive 340B program regulation, aka the mega-reg, was barreling at full throttle toward the checkered flag. [ms-protect-content id=”2799″]
The Health Resources and Services Administration had sent the draft regulation to the White House Office of Management and Budget for review in April. It reportedly was going to cover the definition of an eligible patient, contract pharmacy arrangements, hospital eligibility criteria, and eligibility of off-site facilities. It was on track for release in early July, and HRSA’s Office of Pharmacy Affairs had even given stakeholders a head’s up that they would get 60 days to comment.
Then the engine seized.
Acting in a suit filed by drugmakers, a federal district judge held in late May that HRSA lacked authority under the 340B statute to promulgate regulations implementing the Affordable Care Act’s 340B orphan drug exclusion. Congress, the judge said, never gave HRSA broad rulemaking authority to carry out all of the 340B statute’s provisions.
That forced HRSA to go back to the drawing board to decide whether it had clear authority to regulate those parts of 340B that the mega-reg covered. It announced its conclusion in November: Mega-reg was dead. “The best path forward,” HRSA said, “is to issue proposed rules where the statute is specific about rulemaking” and to “issue guidance where interpretation of the statutory requirements is needed to inform the implementation of the program.”
On the OPA home page, HRSA says for the record it plans sometime in 2015 to issue 340B guidance addressing “key policy issues.” Unofficially, it reportedly hopes to do so early this year. There’s no word on what the guidance will cover specifically. Stakeholders might learn more during the first week of February, when OPA Director Cmdr. Krista Pedley speaks via video feed at the 340B Coalition winter meeting in California.
In striking down HRSA’s 340B orphan drug exclusion regulation last year, the court found that Congress specifically instructed HRSA in the Affordable Care Act to issue 340B regulations establishing civil monetary penalties for drug manufacturers that intentionally overcharge and creating a mandatory and binding administrative dispute resolution process. Congress also authorized HRSA in the ACA to issue regulations setting standards for calculating 340B ceiling prices, the court said.
HRSA actually began the rulemaking process on manufacturer sanctions and the dispute resolution process in September 2010, but it took no further action and said it would not do so until it secured more funding from Congress. Congress finally provided that funding boost in January 2014.
According to the federal government’s latest agenda of upcoming regulatory actions, HRSA plans to publish a rule in April that jointly addresses 340B ceiling prices and manufacturer civil monetary penalties. A second rule on dispute resolution is penciled in for September.
The agenda of forthcoming regulations also noted that HRSA had withdrawn three other previously announced proposed regulations that would have:
- established civil monetary penalties for 340B covered entities,
- established the extent to which state AIDS Drug Assistance Programs can collect 340B rebates from drug manufacturers, and
- modified the allowable uses of 340B program income for National Hemophilia Treatment Program grantees.
There’s been no word about next steps on any of the three.
It is not clear whether HRSA and the Centers for Medicare & Medicaid Services will be issuing joint guidance on protecting drugmakers from supplying both 340B discounts and Medicaid rebates on the same drugs dispensed or administered to Medicaid managed care patients. Last month, HRSA published a policy release clarifying that the purpose of its 340B Medicaid Exclusion File. It said the database it maintains to protect drugmakers from giving both 340B discounts and Medicaid rebates on the same drugs is to help covered entities, states, and manufacturers avoid duplicate discounts specific to Medicaid fee-for-service and not to Medicaid managed care. HRSA and CMS reportedly have heard from Capitol Hill they should work together to help states exclude 340B purchased drugs from Medicaid MCO rebate requests.
Last but not least, final briefs in the drug industry’s second lawsuit over the 340B orphan drug exclusion are due in late March. Shortly after the court invalidated HRSA’s original orphan drug exclusion final rule, HRSA issued an “interpretative” rule in which it continues to stand by its position that the 340B statute permits rural and cancer hospitals to purchase orphan drugs at 340B prices when orphan drugs are used for any indication other than treating the rare disease or condition for which the drug received an orphan designation.
The government is due to file a motion for summary judgment in the new lawsuit by this Friday, Jan. 16. The drug industry’s opposition brief and cross motion for summary judgment is due Feb. 13.
Coming next: Upcoming GAO and OIG reports [/ms-protect-content]